*This post was written in collaboration with Beresfords.
Because you are not actually BUYING a property, a lot of people make the assumption that renting is much easier than getting a mortgage. The thing is, although the process is a bit shorter and can be completed more easily, that doesn’t mean that there are not terms that are confusing that crop up during the application and renting process that can be a bit hard to figure out. The first time I rented a property I was actually terribly naive. I didn’t even know you had to pay a deposit! Even if it is not the first time you are renting using a UK estate agent, there still could be a few terms you are unsure of. That’s why I have put this guide together with some definitions, to help you bust the jargon and figure out what everything on your paperwork means.
AST (Assured Shorthold Tenancy)
An AST is a type of tenancy, and although you may not have heard it being called this before, it is the most common type of tenancy agreements in the UK. The tenant would have exclusive use of the property, and in this instance the tenant could be one person, a couple or a group of individuals (as long as they are on the agreement). The minimum time period for an AST is six months.
Arrears means the amount of rent that has not been paid. Say for example if your rent was £700 per month and you hadn’t paid for two months you would be £1400 in arrears.
No, I never knew these existed outside of Monopoly either. Even the best UK estate agent might sometimes have a legitimate reason to ask for a banker’s draft. You might need to use a banker’s draft to pay your first months rent or your deposit. It is a little bit like a cheque, but you would have already paid the money to the bank. They can be used by people who do not have access to cheques.
A break clause is a little bit like a “Get out of jail free” card. This can work in the favour of either the tenant or the property owner. This means that whoever the clause is in favour of can end the tenancy early. There could be any number of reasons for a break clause to be written into a tenancy agreement. It could be that the tenant has a job that means they could suddenly be re-located.
This deposit is paid upfront and covers any potential damage to the property. In the UK, this can be equal to up to 5 weeks rent, but the most common amount is usually one month’s worth of rent. If there is no damage done, then the deposit is pad back at the end of the tenancy.
Inventory and schedule of condition
All good estate agents will provide an inventory schedule and a written description of what condition the property is in once the tenants move in. This is what will be used when the tenants leave to assess whether they will get back the security deposit. It is important to note anything that is different or missing at the time this is done, to ensure there are no issues further along the line.
The tenancy agreement is the contract between the tenant and the landlord. This is one of the most important documents in the process and covers how much the rent payment is and when it should be made. They can either be fixed term or run from month-to-month.